Anger over the proposed State Farm PartsTrader program revived a sleeping giant in Mississippi, revitalizing the previously dormant Mississippi Collision Repair Association, which met on May 23 for the first time in many years.
“Due to many factors, our association as been inactive for almost eight years,” said Chad Smith, treasurer of the Mississippi Collision Repair Association and co-owner of Smith Bros. Collision Center with two locations in Brookhaven and McComb. “But the new State Farm program has re-ignited our association’s fire!”
The years may have gone by in comfort and complacency, but the controversy and negativity surrounding the State Farm Proposed Parts Procurement Program within its Select Service Program changed all that. More than 100 MCRA members, as well as Mississippi Attorney General Jim Hood and John Wells of the Mississippi Department of Insurance, came together in Pearl, Miss. to hear what body shop owners from Birmingham, AL had to say about the PartsTrader program. Birmingham is one of the four national test markets where the PartsTrader program is being tested.
Usage of the PartsTrader software has been required by State Farm in four test markets: Tucson, AZ, Birmingham, AL, Grand Rapids, Mich. and Charlotte, NC. Approximately 10 percent of State Farm Select Service shops are participating in the pilot.
The Mississippi Collision Repair Association invited auto body and repair shop owners from Birmingham to come to their meeting to discuss their experiences with PartsTrader.
“We wanted to know what the program is and what it will do to our industry, and the Birmingham group had nothing positive to say about the PartsTrader program,” said John Mosley, who owns and operates Clinton Body Shop Inc. and Clinton Body Shop of Richland in Central Mississippi. Mosley is a past president and one of the founding members of the association.
“No one from State Farm has called, visited or made any attempt to explain anything about the PartsTrader program to our shops or to our local industry,” Mosley said. “The only knowledge we have of this program is what we read in the trade publications and the short video produced by State Farm. My personal interpretation of the video leaves me knowing the program is real and they plan to roll it out nationwide. The shops will have no choice but to participate in PartsTrader if they remain on the DRP and our choice of parts suppliers will be limited and the profit on parts will definitely go down.”
Even though he hasn’t tried it, Mosley declared he isn’t interested in the electronic parts ordering application program and his answer to State Farm will be a resounding “NO!” if PartsTrader is a requirement to continue with the Select Service program. Mosley wants to stay with the Select Service program because it helps shops by saving time waiting on appraisers and allows the shop to determine what type of part and which supplier would serve to properly repair the vehicle in the least amount of time. However, he is willing to give up Select Service if it becomes tied to PartsTrader.
Mosley is one of several Mississippi auto body shop owners who opposes the PartsTrader program because, he says, it forces shops to wait for the software program to gather bids on parts. Supplements or a big repair job could create an administrative nightmare, Mosley said, adding that body shops would need to hire an additional employee to sit at the computer all day monitoring the bid process.
Bill Fowler, who owns Bill Fowler’s Bodyworks in Southaven, Miss., couldn’t agree more. “The concept that adding additional steps and wait times will increase efficiency and cost effectiveness flies in the face of logic,” he said. “The fact that neither State Farm nor PartsTrader executives can offer any tangible evidence that it does expedite the process, but instead answer direct questions with half-truths, evasiveness and outright misrepresentations gives great cause for concern and raises the suspicion that there are underlying ulterior motives to reduce profitability for collision repair shops. It is insulting for State Farm to suggest that shop owners/operators don’t have the good sense to procure parts in an expeditious manner and they have a better way that involves foisting considerably more administrative time onto parts suppliers and shop owners, with no cost or consequence to themselves. Regarding State Farm’s real motivation in demanding that this program be implemented—I believe insurance companies view shop profits as money they left on the table. They won’t be satisfied until they have it all,” Fowler said.
Fowler said he won’t participate in the program either.
“I think this PartsTrader debacle has caused many a shop owner to drag out the Select Service agreement they signed and revisit just exactly all the things they agreed to,” said Fowler. “They are coming to a collective realization that all the language, terms and conditions contained in that agreement aren’t just words to fill space. Each and every one of those conditions will eventually come to fruition and many are reconsidering if it is worth it. As far as me giving the program a try, I have been quoted as saying, ‘If you put a s#!t sandwich in front of me, I don’t have to take a bite to tell you I don’t like it.’ So, no, there is no chance I will participate in the program, either voluntarily or involuntarily.”
Mosley also takes issue with the State Farm video released in May. “The State Farm video states this program will increase efficiency in the repair process. My belief is it will decrease efficiency while enabling State Farm to keep more money out of the repair by taking a share of the parts profits. This is a very deceitful act to perform under the cloak of fairness and efficiency. The only real information we have learned in our area came from shop owners, suppliers and a former State Farm employee from the Birmingham area.”
The Birmingham shop owners attending the MCRA meeting who have actually tried the program “withdrew themselves from the Select Service program,” said Mosley. “They stated the program was a nightmare. They said it held up the repair process by gathering bids on parts. According to these shop owners, one by one, they told us we will have to hire more administrative personnel to keep up with the program demands. They echoed what we firmly believe: this program will slow down the repair process, inconvenience the consumer, and cost the shops money in an effort to give State Farm more control of the parts and their costs.”
George Avery, a Property & Casualty Claims Auto Consultant who has been with State Farm for 33 years, said about the Birmingham shops: “They made a business decision. I think a lot of them left before they even used the tool, which we felt was unfortunate, but that was a business decision they needed to make. I just don’t like to see a situation where someone makes a decision based on inaccurate or incomplete information. Info gets passed and sometimes it’s inaccurate and assumptions are made.”
In a letter to George Avery, Mosley writes: “This program is now serving as a catalyst to both ignite and unite this industry in a manner I have never experienced in my 58 years.... After lengthy discussions with shop owners and parts suppliers in Alabama, I see no way this program is a benefit to the repair shop or the consumer. The underlying purpose of this program is for State Farm to make a higher profit at the expense of the collision repair industry and the parts industry... You present this program as a tool of efficiency serving to expedite repairs... How can any program that adds to the administrative process by gathering bids, waiting for those bids before we can begin repairs, only to be waiting again when we have a supplement, add to efficiency? There is no way.”
Avery said State Farm responded directly to Mr. Mosley in a personal letter.
Two of Mosley’s biggest worries with the PartsTrader program are losing his relationships with parts suppliers—he said he doesn’t want a relationship with a piece of software—and how the parts bidding process will affect repairs.
“In order for a vendor to win a bid, they have to be the lowest price. Being the lowest price doesn’t mean it will be good. It means a lot more to me to do a proper repair than finding the cheapest part to do the repair,” Mosley said. “We have a duty to our customers to fix vehicles with parts that will do that and I know who to get parts from.”
According to an Automotive Services Association (ASA) fact-finding study: “State Farm can currently see the discounted MSRP prices provided by dealerships. ASA’s research shows this to be one of the largest concerns from the repairer’s perspective. State Farm was made aware of this during the pilot process and reports it is seeking ways to address this.” Suppliers cannot see “price quotes” made by other suppliers.
The ASA report also said that pilot shops have reported experiencing increased cycle time delays as related to “Priced Perfect” recycled parts – based on inaccurate description. “This is not a new issue. PartsTrader believes that a combination of supplier education and the planned feedback and ratings system can help address this,” the report said.
Another issue to consider, Fowler noted, is “how State Farm is reacting to the wholesale rejection of the program in the Birmingham market area. They are scrambling to find replacement shops for their Select Service program and are approaching the very shops that they removed form the program when they scrapped the Service First program, or shops that have always passed over because of poor quality repairs, excessive charges, or both. State Farm bragged that only the best of the best shops were selected to participate in the Select Service program, so what does it say about the integrity of their DRP program when they are enlisting the very shops they have already rejected? Why is this part program so important to State Farm that they would allow this question to be raised?”
While the State Farm PartsTrader issue has brought some auto body shops up in arms, in Mississippi, State Farm has inadvertently revived an association.
“Our association was very strong for several years,” Mosley said. “We helped bring I-CAR and other training to the state of Mississippi. We lobbied for legislation to protect consumers rights in our state. But we became victims of our own complacency. Everything was going good, so the once-energetic association slowed down and became inactive. But this issue served as a spark to unite our association, and body shops nationwide. The one thing this PartsTrader program has succeeded in is waking up and helping to unify our industry. The Mississippi Collision Repair Association is back, is on track, and will stay focused on this industry.”